Australia’s current industrial relations system provides minimum national basic terms and conditions of employment which are supplemented by a complex technical and legal framework covered by legislation, awards and enterprise-level bargaining agreements.
This system is not delivering for workers, for employers or for the economy. Low or zero real wage growth is an issue for workers while also being a documented drag on economic growth. The inability of policy makers to address record unemployment in some regional areas and underemployment across the economy undermines the social compact and fosters ever growing inequality. It is also clear that the system lacks the adaptability to respond to influences such as the ‘gig economy’, automation and climate change,
The current system ignores the diversity of Australia’s economy and population in geographic spread, economic activity and social context. In a nation and economy so diverse, the current system creates winners and losers based primarily on location. Established businesses close to the centre of our cities are naturally advantaged by a scheme which insists on universal application of standard terms and conditions of employment.
The failure of policy makers to address the fundamental flaws in the system is related to the corruption of debate surrounding industrial relations policy, which has become a partisan plaything. Contemporary debate on this topic is primarily framed by reference to major points of conflict, for instance the Waterfront Dispute and WorkChoices. Defining as those events were for a generation of working Australians, they were symptoms of a broader malaise.
The well of policy debate has been poisoned by the rancour of past conflict and has resulted in a climate where common ground is harder to find. How else can one explain the position of union leaders publicly defending the indefensible (domestic violence) and equally employer groups providing cover for the systematic underpayment of basic conditions (wage theft). However, to focus solely on the politics of industrial relations prevents a closer examination of the true problems with the system itself. At the heart of the problem is the enterprise-level bargaining framework, underpinned as it is by awards and a highly legalistic structure.
Whether intended or accidental, the decline in relevance of the union movement and the inevitable shrinking influence of unions as a part of the civil society landscape has at its root enterprise-level bargaining. In the modern union, significant resources are dedicated to negotiating new enterprise agreements, interpreting and arguing points of interpretation of existing bargaining agreements, or litigating workplace disputes related to enterprise agreements. Union resources are so focused on achieving incremental change to a narrow band of ‘permitted matters’ such that focus has been lost on bigger struggles, including addressing the decline in union membership itself.
It is hard to argue, however, that unions and workers are the only losers in this system. Employers too must expend significant resources on enterprise bargaining and litigating disputes. Virtually none of those efforts result in increased productivity or other positive benefits for the economy.
The primary sin of the current system is that it pits worker against worker. It forces employers to compete against each other on terms and conditions of employment (cost of labour) rather than on innovation, technological improvements, productivity enhancements, skills, expertise, or indeed on things like location or approaches to corporate social responsibility.
We need to move beyond points of conflict like the Waterfront Dispute and WorkChoices as reference points for the true contours of Australian industrial relations, and we need to remove workers and employers from the front line of industrial disputation. Their efforts are better focused on what they are good at – applying skilled labour and being engine rooms of economic activity for our economy. The continued framing of debate by reference to old battles also prevents us from looking forward and designing a system which is responsive to the needs of today’s workforce and economy, while being adaptable enough to change as needed.
Neither can government continue to wash their hands of industrial relations as a matter solely between workers and employers. Industrial relations is the bedrock on which the entire economy is footed, so government has a vested interest.
A better industrial relations model would see unions, employer bodies and government coming together to reach a tri-partite national partnership agreement focused on basic terms of employment for all Australians – for example annual and personal leave entitlements, basic rights and obligations, and standard hours of work.
This national partnership approach would also provide a forum to debate and agree actions to boost standards of living, improve productivity, reduce unemployment and underemployment, reduce regional and rural disadvantage, and to adapt our industrial relations settings as needed in response to major challenges, whether they be man-made or natural.
Genuine negotiations between unions and employer bodies, removed from enterprise-level conflict between managers and workers, would result in less hostile workplaces and workplace cultures.
Wage rates and other conditions would be agreed on a sectoral basis as part of subsidiary tri-partite agreements based on geography or industry. In this system, regions would be given the opportunity to compete favourably with city cousins. Having the same conditions across an industry or region would allow employers to focus their efforts on competing through technology or innovative practices, or indeed by becoming an employer of choice for the most skilled workers.
Central to this model is the need to remove industrial relations from courts and tribunals and return it to the negotiating table, with government as the honest broker and guarantor of last resort.
Our economy has changed, and the pace of change is accelerating. The system has not kept up with that change, and indeed has embedded disadvantage which is likely to become more pronounced. The current system has passed the end of its useful life and the task of re-shaping our industrial relations framework for the twenty-first century is now an urgent necessity.